Data analytics company Palantir will pay US$1.7 million in back pay and stock options to settle charges that it routinely discriminated against Asian job applicants. In addition, it must also hire eight people from among those it allegedly discriminated against.

The charges go back to September last year, when the Department of Labor accused Palantir of rejecting Asian software engineers for jobs even though they were as qualified as white applicants. Palantir also maintained a discriminatory employee referral system, the Labor Dept. alleged.

Tuesday's deal ends a threat to Palantir's government contracting business. Under federal law, companies that work for the government are obliged to ensure their hiring practices and policies are free of all forms of discrimination.

Palantir is fairly secretive about the work it does, but its clients include the federal government and U.S. law enforcement agencies.

The company didn't respond to a request for comment.

Palantir is based in Palo Alto, in the heart of Silicon Valley, and the Justice Department's accusations further highlighted hiring practices in the region.

Most major IT companies in the region have admitted that minorities are under-represented in their engineering ranks, and while they have pledged to do better, progress has been slow in coming. Earlier this month, the Labor Dept. reportedly accused Google of systemic wage discrimination against women.